It appears we are fulfilling the current down channel. I don’t expect it, but we may get another low today. If this happens, I’ll add to UNG again with 10%, possibly more. Need to be patient with that.
Fundamentals are still not exactly ready to support higher prices. Production is increasing again slightly while most demand factors are at their maximum. It appears we will get a cold shot across the US; this can only be of so much help to prop up prices. The market knows this and it appears fundamentals are still supporting the idea of stair stepping lower in price. If production increases to a new high, prices will reach a new low, and probably a substantial one, like $2. If production hovers here, prices will most likely swing back and forth much with the changes in the weather. All the while waiting on LNG export additions.
I have no idea when production will finally stall out for good, but I believe it will be in the coming months. With drilling rig counts falling and legacy well declines continuing, this should be evidence enough. I will stay long due to gas pricing and positioning.
I would like to see UNG get to $17 in order to add 10% of my funds to my position. I will be careful if prices fall, they could continue on past $17 quite easily. As usual, I will post to Twitter is quick is a can if I choose to add.
And here I was, thinking the weather forecast couldn’t get much worse. ECMWF lost almost 23 HDDs overnight. 23 HDDs is pretty extreme, and sometimes calls for a correction in the next forecast. We cannot count on this, so the plan is to just be patient. I will be sticking with my original plan and continue to layer into UNG. Seeing profits twice now and not capitalizing on them, I’m going to adjust back to reducing each time I see profits without a significant signal to hold longer.
Today prices gapped down past my breakeven average, so there was no option to place a stop. So I’m stuck holding 30% in UNG at this point. I am not so concerned by this, since I believe the price will get back to $17.32 soon enough. The market continues to create lower highs, staying in the down trend pattern. The supply/demand balance has “tightened”, meaning demand is getting closer to keeping up with supply. This being the case, I believe weather is having stronger influence on pricing. The overnight drop in HDDs is a larger than normal change from one forecast model to the next, which is mostly likely the reason for such a drop in NG prices.
Anyway, enough rambling; had I reduced yesterday, I would again be in a position to add this morning. I will now be placing a limit to sell 1/3 of my UNG position at $17.32 in order to reducing my holdings if we see a rise in price today. The EIA report is today, at the same time it normally is released. Prices could do anything. If UNG happens to dip, I may add. I will post to Twitter as soon I make any moves. Sorry for the late and sloppy posting. Doing this from home isn’t the easiest.
Still hanging around the house today, got some LEGOs to play with a 6 year old. Right now I’m going to continue to hold UNG. 30% of my funds are still in UNG with an average of $17.32. The price at this moments sits a $17.5. when regular market hours open, I will place a stop on 30% of my holdings (1/3 of my holdings, not my funds) at my average of $17.32. I will continue to hold the other 20% of my funds.
Looks like gas is back at resistance; for this reason, one could argue a need to reduce now. As for fundamentals, looks like weather is still teasing with cold forecast around 15 days out. I don’t have a recent update on supply/demand, but I believe weather is carrying the weight right now. If the forecast continues to show cold that will actually show up, prices will drift higher. If cold continues to tease us with day 15 showing cold, then just disappears, we’ll stay at this ranger or go lower.
I’m not really counting on cold and I probably should reduce, but I am a good position to hold for a chance prices go on up. Trying to play the trend here. We’ll see, only a few more minutes and my stop will be in place.
I’m 1 man with a wife who is sick and a 6 year old to manage. I had a theory about Appalachian production, but that’s going to have to wait. I guess it isn’t really a theory, more or less just interpretation of data.
I am going to hold my UNG position with 20% of funds invested, with an average of $17.5. I originally had planned to add to this position at $17.05. I plan to watch the market when I can, and wait a while today to see if prices drop below $17, and by how much. If I add, should be late in the day and will post to twitter.
It’s hard to be still right now. I’ve placed a stop on UNG back at $17.5, my break even price. I am going to take a chance on the entire position. If the account were $100k or more, I would be reducing, maybe even half of the position. The price does seem to be moving a bit fast, and never moves straight. I’ve drawn a pink line where I feel the price of NG could correct to. Maybe not today, but at some point along the way. I haven’t studied this so much, but I know that when the price moves too fast, it will correct. I hope to learn a better way to gauge this soon. So the pink line is base on previous moves, where corrections happen while the trend continues higher. In other words, this slope looks more accurate to me than the current price trend.
The following image is an interruption, because it’s Friday. I feel the need to share this when it happens.
In short, looks like production is continually weak. Temperatures in the Northeast have been quite cold the last couple of days. This could be contributing to some freeze-ups with production. The weather forecast, according to the map, is still teasing us with some cold coming, but has yet to be reflected in big HDD numbers. This could come with perfect timing over the weekend. I can’t count on this, but just say it would be nice. The rest of the story is about the same as the last couple morning updates. Be sure to go back and read that last few days if you haven’t. Hope everyone has the best weekend ever.